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Economy in Brief

NABE Lowers Projected GDP Growth
by Tom Moeller  October 22, 2012

For 2013, the National Association for Business Economics lowered the expectation for real GDP growth to 2.2%, a revision from the 2.7% expected in May. That follows a little revised projection for 2.2% growth for this year. Quarterly growth is expected to improve to 3.0% by the end of next year. Lowered expectations for growth spread throughout economic sectors. Notably, consumer spending is now seen as rising 2.0% in 2013, not 2.5% as projected earlier. Growth in producers' durable equipment also was lowered to 6.0% and remained down from double-digits early in the recovery. Inventory investment was reduced as were real net exports.

Expectations call for 850,000 housing starts in 2013, after an upwardly revised 750,000 for this year. Expected light vehicle sales show further improvement to 14.8M after a lowered 2012 expectation for 14.2M. Forecasted average monthly gains in payroll employment of 155,000 were lower than expected earlier and up just slightly from the 132,000 projected for this year. The unemployment rate is expected to average 7.9% for all of next year, a slight upward revision. The forecast for consumer price inflation remains low at 2.2% versus a downwardly revised 2.1% projection for 2012. Expectations for growth in prices less food & energy also were lowered slightly to 1.8% for this year and 1.9% for next.

Recent improvement in the bond market is expected to end with continued economic growth. However, the forecasted 2.23% interest rate on 10-year Treasury notes at the end of next year was lowered sharply from the last forecast. Short-term rates should remain stable. The forecast for 5.0% corporate profit growth in 2013 was revised down slightly versus an upwardly revised 7.0% for this year. However, these rates remain well below the 23.2% gain in 2010 and 11.4% growth in 2009 when the recovery first got going. Moderate economic growth is forecast to reduce the federal government budget deficit to $950 billion in 2013 versus its $1.4 trillion 2009 peak.

The figures from the latest NABE report can be found in Haver's SURVEYS database. 

National Association For Business Economics 2013 2012 2011 2010 2009
Real GDP (% Chg. SAAR) 2.2 2.2 1.8 2.4 -3.1
  Personal Consumption Expenditures 2.0 1.9 2.5 1.8 -1.9
  Nonresidential Structures 4.8 10.5 2.7 -15.6 -21.1
  Producers' Durable Equipment & Software 6.0 7.5 11.0 8.9 -16.4
  Residential Investment 11.2 11.2 -1.4 -3.7 -22.4
  Change in Real Business Inventories (Bil. $) 42.6 45.0 31.0 50.9 -139.0
  Real Net Exports (Bil. $) -413.6 -409.6 -408.0 -419.7 -355.2
Housing Starts (Mil. Units) 0.85 0.75 0.61 0.59 0.55
Light Vehicle Sales (Mil. Units) 14.8 14.2 12.7 11.6 10.4
Payroll Employment Avg. Monthly Change (000s) 155 132 153 86 -422
Unemployment Rate (%) 7.9 8.2 9.0 9.6 9.3
Consumer Price Index (Y/Y %) 2.2 2.1 3.1 1.6 -0.3
Fed Funds Rate (%, Year End) 0.125 0.125 0.125 0.125 0.125
10-Year Treasury Note (%, Year End) 2.23 1.80 1.89 3.30 3.85
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